KEY POINTS
- Intel shares surged 24% to $82.57 on Thursday, their best single-day performance since 1987, after Q1 revenue hit $13.6 billion with EPS of $0.29 versus the $0.01 consensus.
- Data center revenue jumped 22% year over year to $5.1 billion as agentic AI workloads shifted compute demand back toward CPUs.
- Traders should watch Intel's Q2 guidance range of $13.8B–$14.8B against consensus of $13.07B as the new benchmark for the turnaround thesis.
Intel posted its best trading day in nearly four decades on Thursday, rocketing 24% to $82.57 after first-quarter results blew past every estimate on the Street. Revenue came in at $13.6 billion with earnings per share of $0.29 — a number so far above the $0.01 consensus that several analysts had to re-check their models. The catalyst was not a one-time accounting benefit. It was the data center.
The CPU Renaissance No One Expected
Intel's data center and AI segment delivered $5.1 billion in revenue, a 22% increase from a year earlier, reversing a trajectory that had investors questioning whether the company could remain relevant in the AI era. The turnaround is rooted in a shift in the AI workload mix. The first wave of AI investment was dominated by training — massive, GPU-intensive jobs that Nvidia owned almost entirely. The second wave, now arriving, is inference and agentic computing, where billions of small, latency-sensitive tasks need to run across distributed infrastructure. CPUs handle many of these tasks more efficiently than GPUs, and Intel's Xeon processors are embedded in virtually every enterprise data center on the planet.
The company's 18A process node, which it is manufacturing in-house at its Arizona and Ohio fabs, is also starting to attract foundry customers. Intel reported that its foundry division secured two new design wins in Q1, though it declined to name the clients. The market read this as validation that Intel can compete with TSMC for at least some categories of advanced chip production — a thesis that was dismissed as fantasy as recently as six months ago.
The Numbers Behind the Move
Beyond the top-line beat, Intel's margins improved more than expected. Gross margin expanded to 42.5% from 38.4% in the prior quarter, driven by a richer product mix as higher-margin data center chips took a larger share of sales. Operating expenses declined 3% sequentially as cost-cutting measures from CEO Lip-Bu Tan's restructuring plan took hold. The combination of revenue growth, margin expansion, and cost discipline produced the kind of earnings leverage that can sustain a rally, not just trigger a one-day spike.
Forward guidance confirmed the trend. Intel projected Q2 revenue between $13.8 billion and $14.8 billion, with adjusted EPS of $0.20 — both well above analyst expectations of $13.07 billion and $0.09, respectively. That kind of gap between guidance and consensus is rare for a large-cap stock and suggests that analysts were still pricing Intel as a distressed turnaround rather than a growing business.
What the Skeptics Are Watching
The bearish read is that one quarter does not make a comeback. Intel has delivered false dawns before — the PC refresh cycle of early 2024, the Mobileye IPO pop, the initial foundry hype — only to disappoint in subsequent quarters. The stock is still down roughly 30% from its 2024 highs, and even after Thursday's move, Intel's market cap of approximately $350 billion is a fraction of Nvidia's. The foundry business, while showing progress, is years away from profitability and requires tens of billions more in capital investment.
But the AI workload argument is harder to dismiss. As the industry moves from training-centric to inference-centric architectures, the total addressable market for high-performance CPUs is expanding, not shrinking. If Intel can hold this growth rate for two or three more quarters, the re-rating has room to continue. The next data point is Q2 earnings in late July, but in the near term, any commentary from hyperscalers this week about CPU procurement plans could add fuel to the trade.
